When starting a catering business, setting the price for your menu is one of the biggest tasks you face. Prices need to cover the money spent on food as well as the cost of labor, time and travel. Setting prices that enable your business to turn a profit while also competing with competition is moderately easy to do.

1. Choose a pricing system for your menu and services. There are three common pricing systems used by catering companies. Fixed pricing is a system in which each item on the menu has a fixed cost and quantity. For example, $20 for two servings of baked chicken. Tiered pricing is a system in which the price per person goes down the higher the total guest count goes up. This system is commonly used for buffets but also can be used when serving seated meals with individual plates and predetermined portions. Custom pricing is a system in which you create a custom quote for each customer based on their needs and your costs. Choose the system that you think will best benefit your business.

2. Determine the markup for your menu. The markup is how much extra you will charge customers in addition to the cost of the ingredients. Marking up your menu items will ensure that you not only make back the out-of-pocket cost of preparing the food but also are paid for preparation time and labor. A high enough markup also will ensure your business turns a profit, but be aware that too high of a markup can lose potential customers looking to save money. According to Food Service Warehouse, many catering companies aim for a markup three times the price of the actual food costs when creating a final price for their menu.

3. Decide on whether you want to include any extra fees in your menu pricing. These fees could include delivery fees, cake cutting fees or setup/take down fees. If you choose to add additional fees for these services, it is essential that the fees are outlined in your menu and in any contracts you prepare with clients.

4. Create a rough draft of your catering menu.

5. Research the rates of other catering companies in your area and compare the price of their menu to the price of your menu. Specifically look at how their rates for similar menu items compare. Make any necessary adjustments to your catering prices to make sure that you are going to be able to compete with other companies. You may need to lower your rates slightly, remove some additional fees or include a free service with your menu to attract customers to your company over a company with similar or lower prices.